Housing in Southern Africa

October 2015

News

udgeting, planning and cash

flow mismatches and unfore-

seen repairs often cause fi-

nancial problems in sectional title

schemes.

However, if the managing agent

or the trustees have contingency

plans in place, there is no need for

the sectional title scheme to have any

financial difficulties.

Hanekom says, “The other op-

tions include having a reserve fund

in place, raising a special levy or ap-

ply for credit. While a reserve fund is

useful, there are pros and cons. The

owners of the scheme may not agree

to pay a higher than necessary levy

each month, purely to bolster the

development’s reserve funds. Having

a reserve fund does put the scheme

in a strong negotiating position with

service providers and the ability to

draw funds immediately. It also helps

the managing agent or the trustees

deal with problems swiftly, but there

are risks here of misuse and if an

owner sells their unit, all the money

that the owner paid into the reserve

fund is not refunded.”

Raising a special levy is another

option when there are large projects

to be undertaken, but this too, has

its problems. According to Hanekom,

the collection of the special levy is

onerous as many owners either will

not have the funds readily available

(as in fixed income earners such as

pensioners or those struggling fi-

nancially), or they will be resentful

of having to pay a large amount

upfront. The benefit of a special

levy is that only the correct amount

needed is collected from the own-

ers, and there is no surplus paid in

unnecessarily.

The last resort is usually to apply

for credit, and this solution can actu-

ally be the best for the sectional title

scheme. The downside to this option

however is that there will be inter-

est and fees charged to the scheme

but this option can also be flexible

and put the scheme in a strong ne-

gotiating position with the service

provider. This option makes a lump

sum available and ready to be paid

over for services rendered.

This system helps fixed income

earners budget for a smaller amount

added to their levy eachmonth rather

than one large lump sum, as in the

special levy.

Hanekom concludes that a sec-

tional title finance company can pro-

vide the funding to body corporates

who qualify for finance and can step

in and help maintain the financial

health of a scheme.

“The most important criteria that

will be checked are the property val-

ues and the percentage of non-payers

in the scheme. If the checks show that

the body corporate does qualify, we

offer a finance facility for any even-

tuality. It is easy to set up, is flexible

and only incur costs when they are

used. The facilities can remain in

place indefinitely and the managing

agent is able to do his job properly,

which ultimately is to ensure that the

scheme is run efficiently.”

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Financial problems in sectional title schemes should be dealt with

swiftly says Mandi Hanekom of Propell, a sectional title finance

company.

he newly launched Central

Supplier Database (CSD) will

improve the way suppliers

conduct business with government.

Speaking at the launch of the CSD

at the Industrial Development Zone

(IDZ) in East London, in the Eastern

Cape, Minister of Finance Nhlanhla

Nene said that the database serves as

the source of all supplier information

for all spheres of government.

The purpose of centralising gov-

ernment’s supplier database is to

reduce duplication of effort and

cost for the supplier and govern-

ment, while enabling the electronic

procurement process. Suppliers can

www.csd.gov.za

Chief Director: Supply Chain

Management ICT in the Office of

the Chief Procurement Officer at

National Treasury, Schalk Human,

said that the CSD is an intervention

to reduce the administration burden

on business.

Among the benefits of being

Database for suppliers

registered on the database is that

suppliers will only be required to

with government, and will not be

required to submit physical tax clear-

ance and business registration cer-

tificates to government departments.

Suppliers in rural areas who do not

always have access to computers

will be assisted through the Thusong

Service Centres, Small Enterprise

Development Agency (SEDA) offices

and the Post Office.

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Financials in sectionals